Meat lovers, get ready to pay up at the supermarket. The worst drought in half a century has taken a toll on this year's corn and wheat crops, raising the cost of feeding cattle and hogs.

Fresh beef's retail value jumped to an average of $4.72 a pound in July, a second straight price record, the Agriculture Department said last week. The Labor Department attributed more than half the gain in the wholesale cost of food seen in July's producer-price index to a 3.8% rise in prices of beef and veal.

Eat Up: Fall may bring a short respite, as farmers slaughter more cattle to avoid paying too much for feed.
William Waitzman for Barron's

The chewing may only get tougher. Karen Short, food retail analyst at BMO Capital Markets, expects a low-teen percentage rise in the price of beef, chicken and pork at supermarkets in 2013. "It's one big daisy chain when it comes to corn [prices] and temperatures," she says.

There may be a brief, tasty opportunity to eat up, however. Drought-stricken harvests tend to prompt ranchers to slaughter more cattle as they attempt to avoid paying too much for feed; that increases supplies of meat. One small boost for producers came last week when President Obama, campaigning in Iowa, announced $170 million in government meat purchases, to help farmers as they fight the drought.

Any price easing this fall will probably end up boomeranging in the other direction next year, since herds will be thinner. So enjoy that New York Strip steak now. Next year's meal could be chuck. "Consumers will trade around," says BMO's Short. "They'll substitute."

-- Brendan Conway

Next Week: Preview

Monday 20

Chicago Fed National Activity Index, which gauges economic activity in July, is released. Recent signals have been consistent with weak growth and no inflation pressure, says MFR.

Lehman Brothers Holdings, which emerged from bankruptcy in March, will ask the bankruptcy court in Manhattan to approve a settlement with a unit of
Deutsche Bank
that would bring in nearly $42 million for creditors.

Friday 24

July durable-goods orders are expected to show a 2.5% increase in headline results, notes MFR. But economist Shapiro notes that underlying details were weak in June, and the ISM manufacturing new-orders index suggests they will be soft in July as well.

Poland marks the 23rd anniversary of the creation of the first post-communist government in 1989.

Week's Highlight

Wednesday 22: In a quiet week for economic data, housing takes center stage. First up are existing-home sales for July. Economists see an uptick from June's pace.